Fortunes can quickly change in equity markets. FuboTV (FUBO -7.45%), a streaming specialist, knows something about that.
After a terrible performance in 2024, the stock has already more than doubled in 2025. Recent developments arguably justify the massive jump FuboTV has experienced (more on that below), but can the stock still deliver strong returns from here on out? Let's find out whether it's an attractive streaming stock.
FuboTV faced many headwinds in the highly competitive streaming industry. First, its focus on sports was somewhat of a problem. Many sports leagues are seasonal, so fans would subscribe for the service only as long their preferred leagues were on, and save money through the rest of the year.
Despite this issue, the service managed to attract a growing number of subscribers, but subscription growth declined substantially last year, which was the company's second headwind.
Third, FuboTV remained deeply unprofitable, even though it was making some progress in that department. Still, with the rate of new sign-ups declining, investors were rightly worried whether it would ever manage consistent profitability.
Lastly, the company was facing potential competition from a sports-focused streaming platform in the works, Venu, that had the backing of three of the largest media corporations in the world: Fox, Warner Bros. Discovery, and Disney's ESPN. FuboTV was fighting the Venu project via an antitrust lawsuit, knowing it might not have been able to compete. However, a recent deal made with Disney looks like a game changer.
In January, FuboTV announced it would combine with Disney's Hulu+ Live TV. The resulting company will operate under the original FuboTV name and management (though the streaming platforms will remain separate) and have 6.2 million subscribers in North America.
As of the end of 2024, FuboTV had only 1.7 million paid subscribers in North America, so this is a significant upgrade for the streaming specialist. The deal appears to solve several problems for the company, including its focus on sports streaming.
Hulu+ Live TV will make the new company far more diversified and less susceptible to the seasonal nature of the sports world. Furthermore, the Venu project is now dead. FuboTV settled the antitrust litigation with Disney and the other involved parties.
The company is also getting an infusion of cash as part of this deal. It will receive $220 million from Disney, Fox, and Warner Bros. upon closing this transaction and a $145 million term loan facility from Disney. The streamer had only $161.4 million in cash and equivalents as of the end of 2024.
The loan from Disney is even more interesting. It highlights a key point about the new-look FuboTV, which will be roughly 70% owned by the House of Mouse. Disney knows something about creating a successful streaming platform: Its ESPN+, a leading sport-centric streaming option, and Hulu+ Live TV are both doing pretty well.
FuboTV might not be there yet, but the backing of the larger and more experienced media specialists should make it far more competitive. It's hard to put a price tag on the kind of industry know-how that those already successful can provide.
Sure, the company will continue facing some headwinds. Netflix is slowly getting into live sports, although the extent to which it will compete with established leaders in the field is unclear. Also, FuboTV's shares have already soared on news of this merger, so the upside might be limited from here on out, at least for those only looking at the next 12 months.
In the long run, I would bet on the new FuboTV to perform well, thanks to its already strong position in its niche, a more diversified business, more funding, and help from one of the most successful media companies in the world. Before this deal, I would have advised against investing in it, but the stock now looks far more attractive.
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